Skip to main content

Out of court settlement during ongoing Insolvency Process?

In Vivek Bansal Vs Burda Druck India Pvt. Ltd. & Anr., in a recent judgment the National Company Law Appellate Tribunal (NCLAT) held that a company could exit an ongoing insolvency process even as an interim resolution professional had been appointed and a moratorium imposed under the Insolvency and Bankruptcy Code (IBC) by the adjudicating authority, that is the National Company Law Tribunal (NCLT) triggering the debate over the best option for banks and other creditors to recover their dues-a resolution monitored by the court, or an out-of-court settlement with lenders.

In the judgment, a bench headed by acting chairperson Justice Bansi Lal Bhat noted that since the operational creditor (who had taken the company to NCLT) and the corporate debtor had “amicably settled the dispute”, it allowed the parties to exit the CIRP.

The tribunal decided that as the parties have reached the settlement and the ‘Committee of Creditors’ was not constituted, in exercise of powers conferred under Rule 11 of the NCLAT Rules, 2016, the impugned order dated 27th May, 2020 passed in ‘C.P. No. IB 2223 (ND)/2019’ was set aside and allowed exit from the ‘corporate insolvency resolution process’ which is permissible in terms of the verdict of the Hon’ble Apex Court in ‘Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.’ – (2019) 4 SCC 17). The matter is accordingly disposed of in terms of the ‘Settlement Agreement’ between the parties.

The latest move by the NCLAT paves the way for companies to settle claims and end ongoing insolvency cases. The ‘corporate debtors’ in such cases can thus arrive at a settlement with the lenders, even after initiation of the corporate insolvency resolution process (CIRP) under the IBC.

Comments

Post a Comment

Most viewed this month

Appellate authorities under Special Statutes cannot be asked to condone delay

Madras High Court in R.Gowrishankar vs. The Commissioner of Service Tax has held that Appellate authorities cannot be asked to condone the delay, beyond the extended period of limitation A Division Bench comprising of Justices S. Manikumar and D. Krishnakumar, made this observation while considering an appeal filed against Single Bench order declining to set aside the order made in the condone delay petition filed by the petitioner to condone 223 days in filing the appeal before the Commissioner of Service Tax (Appeals). Article referred: http://www.livelaw.in/appellate-authorities-special-statutes-cannot-asked-condone-delay-beyond-extended-period-limitation-madras-hc/
Post a Comment
Read more

'Seize assets to pay damages to accident victim'

Her story might be an inspiration for the physically challenged but justice has remained elusive for her. In 2008, a bus accident left research engineer S Thenmozhi, 30, paraplegic. In April 2013, the motor accident claims tribunal directed the Tamil Nadu State Transport Corporation (TNSTC) to provide her a compensation of 57.9 lakh. However, TNSTC refused to budge and on Tuesday a city court ordered attaching of movable assets of the transport corporation. Thenmozhi was employed in C-DOT, a telecom technology development centre in Bangalore. On July 21, 2008, she was coming to Chennai in a private bus. Around 2am, the bus had a flat tyre and the driver parked it on the left side of the road near Pallikonda in Vellore district on the Bangalore-Chennai highway. While the tyre was being changed, a TNSTC bus of Dharmapuri division hit the stationary bus. The rear part of the bus was smashed and passengers were injured. Thenmozhi who had a seat at the back of the bus suffered...
Post a Comment
Read more

Mumbai ITAT rules income of offshore discretionary trust is subject to tax in India

The Mumbai Income Tax Appellate Tribunal (ITAT) has recently determined the following issue in the affirmative in the case of Manoj Dhupelia: Should the income of an offshore discretionary trust be subject to tax in India, if no distributions have been made to beneficiaries in India? The question arose from appeals filed by individual beneficiaries in relation to a Lichtenstein-based trust, the Ambrunova Trust and Merlyn Management SA (the Trust) with the ITAT. It is important to note that the individuals in this case were amongst those first identified by the Government of India (GOI) as holding undeclared bank accounts in Lichtenstein. The ITAT ruling raises the following issues: Taxation of Trust Corpus: ITAT classified the corpus of the trust as "undisclosed income" and declared it taxable in the hands of the beneficiaries. Taxation of Undistributed Income: ITAT refused to draw a distinction between the corpus and undistributed income from the trust and declared i...
Post a Comment
Read more